The crisis which began during summer 2007 and intensified in late 2008 has generated negative consequences both economically and socially. However, Europe has many strengths, enabling it to implement an efficient recovery strategy. This recovery should be based on greater supervision of the financial sector, support for the real economy and support for the European population.

ACT

Communication for the spring European Council of 4 March 2009 - Driving European recovery - Volume 1 [COM(2009) 114 final – Not published in the Official Journal].

SUMMARY

This Communication sets out different measures to be taken to trigger a recovery in Europe following the financial crisis which started in summer 2007 and which became large-scale in late 2008. It presents an ambitious programme which aims at:

Restoring and maintaining the stability of the financial sector

The report presented by the De Larosière Group (pdf), makes supervision the cornerstone of a stable financial system.

The European Commission intends to establish a supervisory framework to detect potential risks related to financial markets early on by means of:

a European body to oversee the stability of the financial system as a whole;

a European financial supervision system.

Security must also be an integral part of future European regulations. To this end, the Commission plans for:

a legislative instrument which establishes regulatory and supervisory standards for hedge funds and private equity;

a White Paper on tools for early intervention to prevent a possible crisis;

a report on derivatives and other complex structured products to increase transparency and ensure financial stability;

legislation to increase the quality and quantity of prudential capital, to address liquidity risk and limit excessive leverage.

With the aim of rebuilding the confidence of European investors, consumers and small and medium sized enterprises in their economies, their access to credit and their rights as concerns financial products, the Commission will undertake action in the following areas:

increasing the efficiency of marketing safeguards for retail investment products;

The remuneration of employees in the financial sector and its directors is also under consideration through a package of legislative proposals which aim at submitting them to prudential oversight.

Finally, a harmonised system of sanctions should be introduced in order to prevent market abuse.

Supporting the real economy

The Single Market should continue to be the motor of economic and social prosperity in the European Union (EU). To this end, Member States should increase their support for the real economy by implementing the following principles:

eliminating barriers to the free movement of goods and services;

implementing structural changes which meet climate and energy challenges through the promotion of a low carbon economy;

promoting the exchange of good practices and synergies in terms of European cooperation;

keeping the Single Market open to trade partners.

Supporting the population

The crisis has also had negative consequences on the labour market and has accentuated problems of unemployment and social exclusion. In order to combat these issues, the Commission invites Member States to initiate action in the following areas:

Part of this Communication was proposed in preparation for the G20 summit in London (April 2009). The following proposals were made with the aim of mitigating the deficiencies of the global economy caused by the crisis: